Ally Bank 2012 Annual Report Download - page 29

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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following Management's Discussion and Analysis of Financial Condition and Results of Operation (MD&A), as well as other
portions of this Form 10-K, may contain certain statements that constitute forward-looking statements within the meaning of the federal
securities laws. The words “expect,” “anticipate,” “estimate,” “forecast,” “initiative,” “objective,” “plan,” “goal,” “project,” “outlook,”
“priorities,” “target,” “intend,” “evaluate,” “pursue,” “seek,” “may,” “would,” “could,” “should,” “believe,” “potential,” “continue,” or the
negatives of any of these words or similar expressions are intended to identify forward-looking statements. All statements herein, other than
statements of historical fact, including without limitation statements about future events and financial performance, are forward-looking
statements that involve certain risks and uncertainties. You should not place undue reliance on any forward-looking statement and should
consider all uncertainties and risks discussed in this report, including those under Item 1A, Risk Factors, as well as those provided in any
subsequent SEC filings. Forward-looking statements apply only as of the date they are made, and Ally undertakes no obligation to update any
forward-looking statement to reflect events or circumstances that arise after the date the forward-looking statement are made.
Overview
Ally Financial Inc. (formerly GMAC Inc.) is a leading, independent, financial services firm. Founded in 1919, we are a leading
automotive financial services company with over 90 years experience providing a broad array of financial products and services to
automotive dealers and their customers. We became a bank holding company on December 24, 2008, under the Bank Holding Company Act
of 1956, as amended. Our banking subsidiary, Ally Bank, is an indirect wholly owned subsidiary of Ally Financial Inc. and a leading franchise
in the growing direct (internet, telephone, mobile, and mail) banking market.
Our Business
Dealer Financial Services
Our Dealer Financial Services operations offer a wide range of financial services and insurance products to almost 15,000 automotive
dealerships and approximately 4 million of their retail customers. We have deep dealer relationships that have been built over our greater-than
90-year history and our dealer-focused business model makes us a preferred automotive finance company for many automotive dealers. Our
broad set of product offerings and customer-focused marketing programs differentiate Ally in the marketplace and help drive higher product
penetration in our dealer relationships. Our ability to generate attractive automotive assets is driven by our platform and scale, strong
relationships with automotive dealers, a full suite of dealer financial products, automotive loan-servicing capabilities, dealer-based incentive
programs, and superior customer service.
Our automotive financial services include providing retail installment sales financing, loans, and leases, offering term loans to dealers,
financing dealer floorplans and other lines of credit to dealers, fleet leasing, and vehicle remarketing services. We also offer vehicle service
contracts and commercial insurance, primarily covering dealers' wholesale vehicle inventories. We are a leading provider of vehicle service
contracts, and maintenance coverages.
We have a longstanding relationship with General Motors Company (GM) and have developed strong relationships directly with GM-
franchised dealers. We are a preferred financing provider to GM and Chrysler Group LLC (Chrysler) (including Fiat) for incentivized retail
loans. Our agreements with GM and Chrysler expire on December 31, 2013 and April 30, 2013, respectively. Ally currently competes in the
marketplace for all other parts of the business with GM and Chrysler dealers including wholesale financing, standard rate consumer financing,
and leasing. Ally expects to continue to play a significant role with GM and Chrysler dealers in the future as the dealer is Ally’s direct
customer for the majority of business that is conducted.
We have further diversified our customer base by establishing agreements to become preferred financing providers with other vehicle
manufacturers including, Thor Industries, Maserati, The Vehicle Production Group LLC, Forest River, and Mitsubishi Motors. During 2010
our primary emphasis was on originating loans of higher credit tier borrowers. For this reason, our current operating results continue to reflect
higher credit quality, lower yielding loans with lower credit loss experience. Ally however seeks to be a meaningful lender to a wide spectrum
of borrowers. In 2010 we enhanced our risk management practices and efforts on risk-based pricing. We have gradually increased volumes in
lower credit tiers in 2011 and 2012. We plan to continue to increase the proportion of our non-GM and Chrysler business, as we focus on
maintaining and growing our dealer-customer base through our full suite of products, our dealer relationships, the scale of our platform, and
our dealer-based incentive programs.
Our Insurance operations offer both consumer finance and insurance products sold primarily through the automotive dealer channel, and
commercial insurance products sold to dealers. As part of our focus on offering dealers a broad range of consumer finance and insurance
products, we provide vehicle service contracts, maintenance coverage, and Guaranteed Automobile Protection (GAP) products. We also
underwrite selected commercial insurance coverage, which primarily insures dealers' wholesale vehicle inventory in the United States.
Change in Reportable Segments
During the fourth quarter of 2012, we announced that we had reached agreements to sell substantially all of our International operations.
As a result, beginning in the fourth quarter of 2012, we are presenting our continuing Automotive Finance activities under one reportable
operating segment, Automotive Finance operations. Previously our Automotive Finance operations were presented as two reportable
operating segments, North American Automotive Finance operations and International Automotive Finance operations.
Table of Contents
Management's Discussion and Analysis
Ally Financial Inc. • Form 10-K